The current climate of low interest rates and soaring consumer confidence may be good for the retail business and personal indulgence, but it is having a crippling effect on individual savings, with millions of people choosing spending over saving regularly.

A survey published this week by insurer, Royal London claims that apathy and ignorance are contributing to a potential "time bomb" for savings as millions of people are failing to make adequate provision either for short-term or long-term needs.

The survey found that 44% of the population have not saved or invested regularly in the past six months - and this includes everything from short-term instant access accounts to pension plans.

A dangerous lack of financial knowledge was also revealed, with more than half of those surveyed having no idea at all how much their pension will be worth when they retire.

"This shows a frightening lack of knowledge," says professor Steve Worthington of Staffordshire University, who worked with the insurer on the study.

"I'm worried that people are not aware of the levels at which they should be saving, and do not consider savings to be an essential part of their monthly outgoings."

Royal London concluded that every adult needs to save at least another £1,000 a year if the £27bn savings gap identified by the Association of British Insurers is to be reduced.

Chris Ide, chief executive of Royal London says: "We commissioned this report to get under the skin of people's saving habits and how successfully they are making provision for the future. The results are worrying."

Consumer debt is at a record high. The average household owes £32,500, of which £23,600 is mortgage debt, according to a report last month from analysts at Deutsche Bank.

According to the British Bankers Association, which represents some of the country's biggest retail banks, gross lending for March - totalling £10.9m - was 42% higher than March last year and consumer spending on credit cards was up 10% over the same 12 months.

The level of personal deposits with the major banks at the end of April was £356.8bn, according to the BBA, but a spokesman cautioned: "It's becoming more and more important to put something aside for the future and the earlier you start, the easier it will be.

"Most people can afford to save something, even though it might not be a lot, but the key is to get into the habit of saving regularly.

"Although interest rates are generally low at present, there is a lot of competition for savings and there are some good interest rates around."

The Council of Mortgage lenders this week said most households were coping with their debts, largely thanks to low interest rates. The good news is that they found many people were keen to reduce their borrowings over the next two years.

But the CML issued a cautionary note for the many thousands of households with low levels of savings, who are, it says, more likely to have debts that consume a high proportion of their monthly income, leaving them particularly vulnerable if their income declines or they lose it altogether.

The study also found that people with mortgages were more likely than other consumers to have loans, finance deals and other credit arrangements, further adding to their financial burden.

CML director general Michael Coogan said: "It is reassuring that the survey found that most households are coping with debt.

"This is borne out by the decline in mortgage arrears, but neither lenders nor borrowers can afford to be complacent about the future.

"Against the current economic backdrop, it would be worrying if there were large-scale problems in coping with debt.

"The fact that some households are struggling, or appear vulnerable to adverse events like unexpected loss of income, should encourage caution."